Question
help plz
Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40 million cash on October 1, 2012, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end. Prepare the journal entries on October 1, 2012, to record the notes payable for Precision Castparts (Enter your answers in dollars not in millions. Omit the "$" sign in your response.) Prepare the journal entries on October 1, 2012, to record the notes receivable for Midwest Bank b. (Enter your answers in dollars not in millions. Omit the "$" sign in your response.) Record the adjustments on December 31, 2012, for Precision Castparts. (Enter your answers in dollars not in millions. Omit the "$" sign in your response.) Record the adjustments on December 31, 2012, for Midwest Bank. (Enter your answers in dollars b. not in millions. Omit the "$" sign in your response.)
Explanation / Answer
1a. Cash Dr. 40 million
Notes payable Cr. 40 million
B. Notes receivable Dr. 40 million
Cash Cr. 40 million
3.A. Interest expense Dr. 0.8 million
interest payable Cr. 0.8 million
(40 million*8%*3/12=0.8)
B. Interest receivable Dr. 0.8 Million
interest revenue Cr. 0.8 million
